Jsw Steel

Please refer to important disclosures at the end of this report 1

(Rs cr) 1QFY11(S) 1QFY10(S) chg (%) 1QFY11(C) 1QFY10(C) chg(%)

Net revenue 4,608 3,894 18.3 4,779 3,990 19.8 EBITDA 1,089 747 45.9 1,134 688 64.7 EBITDA margin (%)

23.6 19.2 447bp 23.7 17.3 646bp

Rep. PAT 350 340 3.0 295 234 26.2

Source: Company, Angel Research

JSW Steel reported consolidated net revenue of Rs4,779cr in 1QFY2011, below our estimates of Rs5,817cr. Net profit at Rs295cr was also below our estimates of Rs565cr. The deviation was mainly due to lower sales volume.

1QFY2011 hit by lower sales volume: Net revenue grew by 19.8% yoy to Rs4,779cr, down 12.2% qoq, mainly due to lower sales volume. Sales volume fell by 9.8% yoy and 21.6% qoq due to cheaper imports mainly from China. However, JSW Steel gained from favourable steel prices. Despite increasing staff cost and adjusted other expenses, EBITDA margin increased by 646bp yoy to 23.7% due to higher realisations, as reflected in EBITDA growth of 64.7% yoy and net profit growth of 26.2% yoy.

Deal with JFE: The strategic alliance between JFE Steel and JSW Steel has finally concluded. JFE Steel will make an initial investment of Rs4,800cr in JSW Steel. The deal has been innovatively structured with options available to JFE Steel to maintain or increase its stake in the event of future equity dilution.

Outlook and valuations: We believe JSW Steel is well placed to capitalise on strong domestic demand on the back of its expanded capacity, improving product mix, commissioning of beneficiation plant to lower iron ore cost and recovery in its US operations. At the CMP, the stock is trading at 7.1x FY2011E and 5.6x FY2012E EV/EBITDA. We maintain our Buy recommendation on the stock with a revised Target Price of Rs1,344 (earlier Rs1,360), valuing the stock at 6.5x FY2012E EV/EBITDA.

Key financials (Consolidated)

Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E

Net sales 15,886 18,897 24,174 29,363

% chg 28.7 19.0 27.9 21.5

Adj. net profit 804 1,321 1,980 2,573

% chg 5.1 7.0 8.2 8.8

FDEPS (Rs) 38.2 63.8 76.2 99.4

EBITDA margin (%) 18.8 21.5 23.3 23.5

P/E (x) 30.3 18.1 15.2 11.6

P/BV (x) 2.9 2.4 1.5 1.3

RoE (%) 10.7 16.1 13.9 12.4

RoCE (%) 8.6 10.7 12.5 12.6

EV/Sales (x) 2.4 2.0 1.7 1.3

EV/EBITDA (x) 12.6 9.2 7.1 5.6


BUY CMP Rs1,155 Target Price Rs1,344

Investment Period 12 months Stock Info

Sector

Bloomberg Code JSTL@IN

Shareholding Pattern (%)

Promoters 45.0

MF / Banks / Indian Fls 5.8

FII / NRIs / OCBs 31.9

Indian Public / Others 17.4

Abs. (%) 3m 1yr 3yr

Sensex 3.3 12.8 17.9

JSW Steel (1.9) 63.0 59.5

Face Value (Rs)

BSE Sensex

Nifty

Reuters Code

Steel

Avg. Daily Volume

Market Cap (Rs cr)

Beta

52 Week High / Low

10

17,957

5,398

JSTL.BO

21,710

1.8

1,350/639

508748

Paresh Jain Tel: 022-40403800 Ext: 348

[email protected]

Pooja Jain Tel: 022-40403800 Ext: 311

[email protected]

JSW Steel Performance Highlights

1QFY2011 Result Update | Steel

July 28, 2010

JSW Steel | 1QFY2011 Result Update

July 28, 2010 2

Exhibit 1: 1QFY2011 performance (Consolidated) Y/E March (Rs cr) 1QFY11 1QFY10 yoy% FY10 FY09 yoy%

Net sales 4,779 3,990 19.8 18,897 15,886 19.0

Raw material 2,681 2,523 6.2 11,231 9,619 16.8

% of net sales 56.1 63.2

59.4 60.6

Power & fuel 276 239 15.2 1,048 804 30.3


5.5 5.1

Staff cost 168 115 46.8 480 519 (7.5)


2.5 3.3

Other expenditure 600 448 33.9 2,128 2,011 5.8


11.3 12.7

Total expenditure 3,725 3,325 12.0 14,887 12,953 14.9


78.8 81.5

Operating profit 1,055 665 58.7 4,010 2,933 36.7

Other operating income 79 24 233.5 60 49 23.9

EBITDA 1,134 688 64.7 4,071 2,982 36.5

Margin (%) 23.7 17.3

21.5 18.8

Interest 273 298 (8.5) 1,108 1,156 (4.1)

Depreciation 361 317 14.1 1,299 988 31.5

Other income 3 4 (16.2) 128 272 (52.8)

Exceptional items (55) 236

408 (795)

Profit before tax 447 313 42.9 2,200 315 597.7


11.6 2.0

Current tax 159 97 63.6 647 73 790.8

% of PBT 35.5 31.0

29.4 23.0

Net income 295 234 26.2 1,598 275 481.1


Exhibit 2: 1QFY2011 - Actual vs. Angel estimates (Rs cr) Actual Estimate Variation (%)

Net sales 4,779 5,817 (17.8)

EBITDA 1,134 1,325 (14.5)

EBITDA margin (%) 23.7 22.8 93bps

PBT 447 744 (39.9)

PAT 295 565 (47.7)



July 28, 2010 3

Partnership with JFE

Following extensive deliberations after a partnership agreement signed on November 19, 2009, the strategic alliance between JFE Steel and JSW Steel has finally concluded, and JFE Steel will make an initial investment of Rs4,800cr in JSW Steel.

Exhibit 3: Relevance of the deal for both the companies

JSW Steel JFE Steel

Proceeds to deleverage balance sheet Presence in a fast-growing market like

India

Access to technology for automotive steel Strategic production base in India for

existing automobile customers

Substrate from JFE Steel Capitalise on future growth through equity

participation

Source: Angel Research

Innovative deal structure

The deal has been innovatively structured with options available to JFE Steel to maintain its stake in the event of future equity (warrants and FCCBs) dilution. However, the issue is subject to the following conditions:

Instrument determination criteria

Scenario 1: Share price is greater than or equal to Rs1,365

Tranche 1: If JSW Steel’s average share price is greater than or equal to Rs1,365 for two consecutive weeks/10days, or if the stock closes at or above Rs1,365 for five consecutive days (from July 27–August 31, 2010), then JFE Steel will be issued 32mn equity shares at a price of Rs1,500/share.

Tranche 2: Going forward, if warrants get converted, JFE Steel has an option to bring in minimum additional amount of Rs600cr to maintain its existing stake or increase it to 14.99%. In which case, additional 4mn equity shares would be issued to JFE Steel at a price of Rs1,500/share or 10% premium to SEBI’s floor price, whichever is higher.

Tranche 3: Further, if the outstanding FCCBs are converted, then JFE Steel can maintain its existing stake or increase it by bringing in a minimum additional amount of Rs300cr. In which case, additional 2mn equity shares would be issued to JFE Steel at a price of Rs1,500/share or 10% premium to SEBI’s floor price, whichever is higher.


July 28, 2010 4

Scenario 2: Share price is below Rs1,365

If JSW Steel’s average share price closes below Rs1,365 during the specified period, the company will issue fully convertible debentures (FCDs) at a 4.5% interest rate to JFE Steel, which will mature in 18 months.

However, during these 18 months, change in share price can trigger two events:

Event 1: During the 18-month period, if JSW Steel’s share price averages or is above Rs1,365 (for two consecutive weeks/10days, or if the stock closes at or above Rs1,365 for five consecutive days), then FCDs will get converted into 32mn equity shares at Rs1,500/share. From here on, JFE Steel will have the option to either keep its existing stake or increase it to 14.99% by opting for Tranche 2 and Tranche 3, as discussed above.

Event 2: During the 18-month period, if JSW Steel’s share price closes below Rs1,365 for the specified period, then, on maturity, FCDs will be converted into 36mn shares at a price of Rs1,331. Later, JFE Steel has the option to go for Tranche 3 (as discussed above) to maintain or increase its existing stake.


July 28, 2010 5

Key analyst meet takeaways

Sales volume lower, but volume guidance stable for FY2011E: During the quarter, sales volume declined by 9.8% yoy and 21.6% qoq to 1.2mn tonnes on the back of rising cheaper steel imports from China. During 1QFY2011, India’s imports were nearly 2.9mn tonnes, up by 75%. Management indicated that sales volume would improve in 2QFY2011E and expects to liquidate inventory by ~80–100ktpm from the current levels of 564kt. Moreover, the company reiterated its volume guidance of 6.7mn tonnes in FY2011E.

Current steel prices to remain stable: Management indicated that HRC prices have corrected to Rs29,500/tonne from ~Rs34,000/tonne and expects prices to sustain at current levels, as steel imports are expected to decline.

Cost of iron ore and coking coal in 1QFY2011: Average iron ore cost in 1QFY2011 was Rs2,800/tonne, and management expects iron ore costs to reduce in 2QFY2011. Further, management indicated that coking coal contracts for 2QFY2011 have been signed at US $225/tonne.

Iron ore production to begin in 2HFY2011E: The company plans to commence iron ore production from its Chile mine in October 2010 and expects to mine 70–80ktpm. The iron ore will be sold in the open market, thus providing a natural hedge against iron ore price inflation.

US coking coal mine: The company expects the mine to start production in October 2010 and expects to produce 70–80ktpm. The cost of production is expected to be US $85–110/tonne (FOB). The development of the mine would entail a capex of US $60mn–100mn.

US operations: During the quarter, plate mill production was up 39% yoy to 38,408 tonnes, while sales volume grew by 143% yoy to 34,986 tonnes. Similarly, pipe mill production increased by 120% yoy to 12,033 tonnes and sales volume grew by 200% yoy to 12,927 tonnes. The company reported an operating profit of US $7.9mn in 1QFY2011 as against a loss of US $13.7mn in 1QFY2010. As per management, the company has started earning an EBITDA/tonne of US $150–200/tonne in the plates and pipes segments.


July 28, 2010 6

Result Highlights

Consolidated net revenue grew by 19.8% yoy to Rs4,779cr; however, it declined by 12.2% qoq primarily on account of lower sales volume. Crude steel production increased by 14.4% yoy, but declined by 1.6% qoq, to 1.6mn tonnes. Sales volume declined by 9.8% yoy and 21.6% qoq on account of cheaper imports mainly from China. However, the company gained from favourable steel prices, which increased by 31.2% yoy and 13.8% qoq to Rs38,692/tonne.

While sales volume of flat products stood at 859kt yoy, sales volume of long products grew substantially by 46% yoy to 225kt. Sales volume of value-added products was lower by 5% yoy to 346kt and that of semis fell by 66% yoy to 107kt.

Exhibit 4: Despite higher realisations


Exhibit 5: ...net revenue was affected


Exhibit 6: ...due to lower sales volume in 1QFY2011


(50)

(25)

0

25

50

75

100

0

15,000

30,000

45,000

60,000

1QFY09 3QFY09 1QFY10 3QFY10 1QFY11

(%)

(Rs/

tonn

e)

Revenue/tonne (LHS) yoy change (RHS)

(40)

0

40

80

120

0

1,500

3,000

4,500

6,000


(%)

(Rs

cr)

Revenue (LHS) yoy change (RHS)

(30)

0

30

60

90

120

0.0

0.4

0.8

1.2

1.6


(%)

(mn

tonn

es)

Sales Volume (LHS) yoy change (RHS)


July 28, 2010 7

Despite staff cost and other expenses (adjusted for Forex loss of Rs55cr) increasing by 46.8% yoy and 33.9% yoy, respectively, EBITDA margins expanded by 646bp yoy to 23.7% on account of higher realisations. This was reflected in EBITDA increasing by 64.7% yoy to Rs1,134cr.

Exhibit 7: EBITDA margin expands by 646bp yoy


Exhibit 8: EBITDA/tonne at US $200


Depreciation was higher by 14.1% yoy to Rs361cr on account of capitalisation of the company’s HSM mill. Thus, consolidated net profit increased by 26.2% yoy to Rs295cr, below our estimates, largely due to lower sales volume.

Exhibit 9: Net profit margin expands by 32bp yoy


0

5

10

15

20

25

30

0

250

500

750

1,000

1,250

1,500


(%)

(Rs

cr)

EBITDA (LHS) margin (RHS)

(100)

(50)

0

50

100

150

200

0

100

200

300

400


(%)

(US

$/t

onne

)EBITDA/tonne (LHS) yoy change (RHS)

(9)

(6)

(3)

0

3

6

9

12

15

(400)

(200)

0

200

400

600

800

1QFY09 3QFY09 1QFY10 3QFY10 1QFY11(%

)

(Rs

cr)

Net profit (LHS) margin (RHS)


July 28, 2010 8

Investment Rationale

Strong volume growth: JSW Steel is expanding its capacity by 3.2mn tonnes from the current level of 7.8mn tonnes, thus taking its total capacity to 11mn tonnes by FY2011E. We believe the company will benefit from increased capacity as volumes are expected to grow at a 31.2% CAGR over FY2010–12E.

Savings due to low-grade ore usage: The commissioning of the beneficiation plant by March 2011 is expected to lower iron ore cost for the company. In case of rising iron ore prices, sourcing of low-grade iron ore fines from Bellary (Karnataka) is likely to reduce the impact of increasing iron ore costs. As 50% of the company’s total iron ore requirement is met from third party, usage of low-grade iron ore is expected to lower iron ore cost by US $10–30/tonne.

Improving performance of the US subsidiary: Going ahead, we expect performance of the company’s US subsidiary to improve. The subsidiary is expected to post EBITDA of Rs174cr in FY2011E and Rs258cr in FY2012E as compared to a loss of Rs188cr in FY2010.

Valuation

We believe JSW Steel is well placed to capitalise on a) strong domestic demand on the back of its expanded capacity, b) improving product mix, c) commissioning of beneficiation plant to lower iron ore cost and d) recovery in its US operations. At the CMP, the stock is trading at 7.1x FY2011E and 5.6x FY2012E EV/EBITDA. We maintain our Buy recommendation on the stock with a revised Target Price of Rs1,344 (earlier Rs1,360), valuing the stock at 6.5x FY2012E EV/EBITDA.

Exhibit 10: Change in estimates

(Rs cr) Earlier estimates Revised estimates Upgrade/(downgrade) (%)

FY2011E FY2012E FY2011E FY2012E FY2011E FY2012E

Net sales 24,174 29,351 24,174 29,363 0.0 0.0

EBITDA 5,623 6,930 5,635 6,912 0.2 (0.3)

EBITDA margin (%) 23.3 23.6 23.3 23.5 5bp (7bp)

PBT 2,704 3,525 2,793 3,648 3.3 3.5

Net income 1,893 2,397 1,980 2,573 4.6 7.3

Net margin (%) 7.8 8.2 8.2 8.8 36bp 60bp



July 28, 2010 9

Exhibit 11: EPS - Angel forecast vs. consensus Year (%) Angel forecast Bloomberg consensus Variation (%)

FY11E 76.2 88.9 (14.3)

FY12E 99.4 132.5 (25.0)

Source: Bloomberg, Angel Research

Exhibit 12: EV/EBITDA band


Exhibit 13: P/E band


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

(Rs

cr)

4x

6x

8x

10x

12x

0

200

400

600

800

1,000

1,200

1,400

1,600


(Rs)

2x

7x

12x

17x


July 28, 2010 10

Exhibit 14: P/BV band


Exhibit 15: Recommendation summary

Company CMP Target

Price Reco. Mcap Upside P/E (x) P/BV (x) EV/EBITDA (x) RoE (%) RoCE (%)

(Rs) (Rs)

(Rs cr) (%) FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E

SAIL 208 - Neutral 85,995 - 13.4 12.5 2.3 2.0 8.5 7.8 18.2 17.0 17.2 16.9

Tata Steel 533 697 Buy 47,274 30.7 8.7 9.3 1.5 1.3 6.7 6.1 17.9 14.7 11.8 11.7

JSW Steel 1,155 1,344 Buy 21,710 16.3 15.2 11.6 1.5 1.3 7.1 5.6 13.9 12.4 12.5 12.6

Sesa Goa 372 - Neutral 30,946 - 7.3 7.6 2.6 1.9 4.0 3.2 45.9 31.5 43.7 34.7

NMDC 261 247 Reduce 103,519 (5.4) 14.4 12.0 5.2 3.9 8.9 7.0 41.8 36.7 55.7 48.3

Hindalco 158 208 Buy 30,197 31.8 8.2 7.8 1.2 1.0 5.7 5.4 15.3 14.1 10.4 10.0

Nalco 431 316 Sell 27,757 (26.6) 27.2 23.1 2.6 2.4 15.8 12.4 9.7 10.7 10.7 12.5

Sterlite 176 228 Buy 59,186 29.4 12.3 8.9 1.4 1.2 6.6 4.5 11.6 14.2 11.1 14.1 Hindustan Zinc 1,004 1,227 Buy 42,431 22.2 10.4 8.1 1.9 1.6 5.8 3.6 20.4 21.6 20.7 22.3


0

500

1,000

1,500

2,000

2,500

3,000


(Rs)

0.5x

1.5x

2.5x

3.5x


July 28, 2010 11

Profit & loss statement (Consolidated) Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Gross sales 9,337 13,554 17,064 20,151 25,967 31,541

Less: Excise duty 743 1,209 1,178 1,254 1,793 2,177

Net sales 8,594 12,346 15,886 18,897 24,174 29,363

Other operating income - 111 49 60 100 150

Total operating income 8,594 12,457 15,935 18,957 24,274 29,513

% chg 39.1 44.9 27.9 19.0 28.0 21.6

Total expenditure 5,887 8,979 12,953 14,887 18,640 22,601

Net raw materials 4,027 6,244 9,619 11,231 13,781 16,699

Other mfg costs 1,684 2,342 2,815 3,176 4,231 5,139

Personnel 176 392 519 480 629 763

Other - - - - - -

EBITDA 2,708 3,478 2,982 4,071 5,635 6,912

% chg 60.8 28.4 (14.3) 36.5 38.4 22.7

(% of net sales) 31.5 28.2 18.8 21.5 23.3 23.5

Depreciation 498 742 988 1,299 1,456 1,778

EBIT 2,210 2,736 1,994 2,772 4,179 5,134

% chg 72.8 23.8 (27.1) 39.0 50.7 22.9

(% of net sales) 25.7 22.2 12.6 14.7 17.3 17.5

Interest charges 400 573 1,156 1,108 1,499 1,684

Other income 105 261 272 128 113 198

(% of PBT) 5.5 10.8 24.5 7.2 4.0 5.4

Share in profit of asso. - - - - - -

Recurring PBT 1,915 2,424 1,110 1,792 2,793 3,648

% chg 47.2 26.6 (54.2) 61.4 55.8 30.6

Extra. Inc/(Expense) - - (795) 408 - -

PBT (reported) 1,915 2,424 315 2,200 2,793 3,648

Tax 623 766 73 647 838 1,094

(% of PBT) 32.5 31.6 23.0 29.4 30.0 30.0

PAT (reported) 1,292 1,658 243 1,553 1,955 2,554

Add: Earnings of asso. 12 (14) 12 11 15 15

Less: Minority interest - (4) 21 33 10 4

Extra. Expense/(Inc.) - - - - - -

PAT after MI (reported) 1,304 1,640 275 1,598 1,980 2,573

ADJ. PAT 1,260 1,585 804 1,321 1,980 2,573

% chg 106.8 25.8 (49.3) 64.2 49.9 30.0

(% of net sales) 14.7 12.8 5.1 7.0 8.2 8.8

Basic EPS (Rs) 78.1 87.2 41.2 68.8 88.0 99.4

Fully Diluted EPS (Rs) 71.4 77.3 38.2 63.8 76.2 99.4

% chg 28.4 8.3 (50.6) 67.1 19.5 30.5


July 28, 2010 12

Balance sheet (Consolidated) Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

SOURCES OF FUNDS

Equity share capital 164 187 187 187 256 256

Reserves & surplus 5,473 7,702 7,617 9,070 19,706 21,947

Shareholders’ funds 5,637 7,889 7,804 9,257 19,962 22,203

Share warrants 22 - - - - -

Minority interest - 192 273 219 209 205

Total loans 4,173 12,136 16,550 16,173 18,710 17,694

Deferred tax liability 1,013 1,252 1,277 1,685 1,786 1,954

Total liabilities 10,844 21,469 25,904 27,334 40,667 42,055

APPLICATION OF FUNDS

Gross block 10,513 18,105 22,389 26,792 30,963 40,730

Less: Acc. depreciation 2,324 3,074 4,080 5,339 6,795 8,573

Net Block 8,189 15,031 18,309 21,453 24,167 32,157 Capital work-in-progress

2,012 5,771 9,585 6,956 9,585 2,118

Goodwill 4 783 783 899 899 899

Investments 245 470 397 628 628 628

Current assets 2,486 4,121 5,093 5,470 14,198 15,593

Cash 339 471 509 303 8,136 8,531

Loans & advances 546 910 1,243 1,604 1,692 1,762

Other 1,600 2,739 3,341 3,563 4,370 5,300

Current liabilities 2,287 4,706 8,263 8,073 8,812 9,340

Net current assets 199 (586) (3,170) (2,603) 5,386 6,253

Mis. exp. not written off 195 - - - - -

Total assets 10,844 21,469 25,904 27,334 40,667 42,055

Note: We have assumed conversion of warrants and FCCBs and infusion of capital by JFE Steel


July 28, 2010 13

Cash flow statement (Consolidated) Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Profit before tax 1,915 2,424 315 2,200 2,793 3,648

Depreciation 498 749 988 1,299 1,456 1,778 Change in working capital

314 172 2,678 (471) (611) (566)

Less: Other income 379 285 874 793 - -

Direct taxes paid 285 364 262 459 373 833 Cash flow from operations

2,822 3,266 4,592 3,361 3,265 4,028

(Inc.)/ Dec. in fixed assets

(2,150) (9,611) (5,971) (2,736) (6,800) (2,300)

(Inc.)/ Dec. in investments

(97) (240) 115 (209) - -

(Inc.)/ Dec. in loans and advances

- - - - - -

Other income 4 62 15 13 15 15 Cash flow from investing

(2,243) (9,789) (5,841) (2,932) (6,785) (2,285)

Issue of equity 212 199 - - 9,056 -

Inc./(Dec.) in loans 138 6,970 2,548 629 2,537 (1,016)

Dividend paid 409 33 340 57 240 332

Others 326 442 972 1,149 - - Cash flow from financing

(384) 6,695 1,236 (576) 11,353 (1,348)

Inc./(Dec.) in cash 194 172 (12) (147) 7,833 395

Opening cash bal. 145 300 522 450 303 8,136

Closing cash bal. 339 471 509 303 8,136 8,531


July 28, 2010 14

Key ratios Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Valuation ratio (x)

P/E (on FDEPS) 16.2 14.9 30.3 18.1 15.2 11.6

P/CEPS 10.5 9.1 17.1 7.5 8.6 6.8

P/BV 3.5 2.8 2.9 2.4 1.5 1.3

Dividend yield (%) 1.1 1.2 0.1 0.8 0.9 0.9

EV/Sales 2.7 2.7 2.4 2.0 1.7 1.3

EV/EBITDA 8.4 9.6 12.6 9.2 7.1 5.6

EV/Total assets 2.1 1.5 1.4 1.4 1.0 0.9

Per share data (Rs)

EPS (Basic) 78.1 87.2 41.2 68.8 88.0 99.4

EPS (fully diluted) 71.4 77.3 38.2 63.8 76.2 99.4

Cash EPS 109.9 127.3 67.5 154.8 134.5 170.3

DPS 12.5 14.0 1.0 9.5 10.0 10.0

Book value 326.7 406.3 401.8 480.0 770.2 857.9

DuPont analysis

EBIT margin 25.7 22.2 12.6 14.7 17.3 17.5

Tax retention ratio (%) 67.5 68.4 77.0 70.6 70.0 70.0

Asset turnover (x) 0.8 0.6 0.6 0.7 0.8 0.9

RoIC (Post-tax) 14.7 9.2 6.2 7.4 9.2 11.0

Cost of debt (post tax) 6.2 5.4 6.2 4.7 6.2 6.5

Leverage (x) 0.7 1.5 2.2 1.8 0.5 0.4

Operating RoE 20.8 15.1 6.2 12.2 10.8 12.8

Returns (%)

RoCE (Pre-tax) 22.9 17.4 8.6 10.7 12.5 12.6

Angel RoIC (pre-tax) 29.4 24.8 14.1 16.8 20.8 20.0

RoE 27.1 24.7 10.7 16.1 13.9 12.4

Turnover ratios (x)

Asset turnover (gross block)

0.9 0.9 0.8 0.8 0.8 0.8

Inventory (days) 60 65 72 71 70 70

Receivables (days) 10 12 11 11 12 12

Payables (days) 35 41 46 43 40 40

WC cycle (days) 27 29 32 32 31 32

Solvency ratios (x)

Net debt to equity 0.7 1.5 2.2 1.8 0.5 0.4

Net debt to EBITDA 1.4 3.4 5.4 3.9 1.9 1.3

Interest coverage 5.5 4.8 1.7 2.5 2.8 3.0


July 28, 2010 15

Disclosure of Interest Statement JSW Steel 1. Analyst ownership of the stock No 2. Angel and its Group companies ownership of the stock Yes 3. Angel and its Group companies' Directors ownership of the stock No 4. Broking relationship with company covered No Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors. Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%) Reduce (-5% to 15%) Sell (< -15%)

Research Team Tel: 022 - 4040 3800 E-mail: [email protected] Website: www.angeltrade.com DISCLAIMER

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Jsw Steel

Economy & Finance

Transcript of Jsw Steel